Big Tech share buybacks drop as AI infrastructure spending surges

Barclays reported that a sharp slowdown in share buybacks by major U.S. Technology firms is unlikely to weigh significantly on the broader equity market. Instead, investors have increasingly rewarded growth over capital returns as artificial intelligence spending accelerates.

The six largest technology companies — comprising Apple, Microsoft, Nvidia, Alphabet, Amazon, and Meta — accounted for more than a quarter of all S&P 500 buybacks during the two-year period spanning 2024 and 2025. Yet, repurchases by these dominant firms have already fallen about 17% over the past year. This decline stands in direct contrast to repurchases across the rest of the technology sector and the wider S&P 500, which have continued to rise.

The reduction in buybacks is driven by the funding needs of a multiyear AI infrastructure buildout. Hyperscaler capital expenditures are expected to cross $1 trillion annually by 2028. To Finance this expansion, these firms are increasingly relying on debt issuance, equity offerings, convertible securities, and operating cash flow.

Additional factors have also played a role in the downturn. Barclays noted that reduced stock-based compensation, following aggressive workforce reductions, may have lessened the corporate need for buybacks. Meanwhile, valuations for Big Tech have compressed from around 33 times earnings two years ago to below 25 times as investors factor in a prolonged investment cycle.

Despite the pullback in buybacks, the broader market's focus has shifted decisively toward growth. Since the launch of ChatGPT in late 2022, the S&P 500 Buyback Index has underperformed the broader S&P 500 by roughly 30%. This divergence suggests that investors place greater value on companies reinvesting capital into AI-driven expansion rather than returning cash directly to shareholders.

Broader macroeconomic and governance discussions are also shaping investor sentiment. A new report from BCA Research, covered by Investing.com, argues that the resilience of U.S. Democratic institutions has been underestimated despite growing concerns over governance under President Donald Trump. Constitutional checks and balances continue to constrain executive power and preserve investor confidence.

The BCA Research report acknowledges that while the rule of law in the United States has weakened over the past two decades and political polarization remains near historic highs, institutions including the Supreme Court, Congress, the Federal Reserve, and state-run election systems act as meaningful counterweights to presidential authority. Fears of a rapid slide toward authoritarianism are overstated, according to the firm, although long-term fiscal deterioration remains a significant structural risk.

The research highlighted specific examples of institutional independence:

• Supreme Court rulings blocked sweeping tariffs and protected the Federal Reserve's autonomy by preventing the removal of Governor Lisa Cook.
• Senate resistance emerged against politically driven Federal Reserve appointments.
• Bipartisan opposition manifested against select administration policies, showing that Republican control has not eliminated internal constraints.
• Legal safeguards, judicial oversight, and public opinion continue to limit the politicization of the military and election administration.

For investors, this institutional resilience has helped maintain the appeal of U.S. Financial assets despite ongoing governance concerns. Foreign investors continue to increase their holdings of U.S. Debt in absolute terms, and the dollar's role as a safe-haven currency remains intact during periods of global instability, even as central banks gradually diversify reserves toward other developed-market currencies.

What to watch next

As the market navigates these competing pressures of massive technology capital expenditure and political governance, analysts are eyeing upcoming catalysts. BCA Research expects the 2026 midterm elections to provide another important institutional check on the Trump administration, suggesting that inflation and affordability concerns could help Democrats outperform expectations and potentially increase legislative gridlock, a scenario that has historically supported U.S. Equities.